An Advantage of a Consumption Tax Over the Present Tax

question 151

Multiple Choice

An advantage of a consumption tax over the present tax system is that a consumption tax

• A)raises more revenues.
• B)would save the government millions in administrative costs.
• C)places more of the tax burden on the wealthy.
• D)does not discourage saving.

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Definitions:

Depreciates

The process of allocating the cost of tangible assets over their useful lives, reflecting the decrease in value over time.

Revenues

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Required Rate

A specific rate of return or interest rate required by investors or lenders to compensate for the risk of an investment or loan.

Net Present Value

A financial metric used to determine the current value of a series of future cash flows, adjusted for time and interest.